Special Issues for Merchants Flashcards
The total cost attributed to units of inventory actually sold during a period
costs of goods sold
Free on Board destination; meaning the transfer of ownership of inventory will occur when the goods reach their destination and the seller will incur the freight charges
FOB destination
Free on Board shipping point; meaning the transfer of ownership of inventory will occur when the goods are shipped and the purchaser will incur the freight charges
FOB shipping point
A calculated amount corresponding to net sales minus cost of goods sold
gross profit
Gross Profit/Net Sales
gross profit margin ratio
Goods held for resale to others
inventory
A complex income statement with sections that segregate cost of goods sold calculations and other components of income and expense; enables enhanced evaluations of data
multiple-step income statement
Net Income/Net Sales
Net profit on sales or Profit margin (ratio)?
General expense category for selling and administrative costs
operating expenses
An inventory system that utilizes a Purchases account and does not update inventory with each sale; inventory is updated by physical count at the end of accounting periods
periodic inventory system
A “real-time” inventory system that updates inventory records with each purchase and sale
perpetual inventory system
A simple income statement with a section for all revenues and another for all expenses; there is no direct association between specific revenue and expense components
single-step income statement
